Palm oil’s new premium is a sign of sustainability and profitability in Malaysia

Published 2024년 10월 29일

Tridge summary

Palm oil prices have surged due to a decrease in supply and strong global demand, despite Malaysia's commitment to environmental sustainability. The country's production has not exceeded 19.85 million tonnes since 2019, with a decrease in oil palm plantation area, as it refrains from expanding. However, sustainable practices like the expansion of the MSPO certification scheme and reduction in primary forest loss demonstrate a balance between environmental responsibility and economic growth. Palm oil's high yield and versatility make it essential for global food security, accounting for 35% to 40% of global vegetable oil demand. The price increase reflects the economic viability of sustainability in the palm oil industry.

Disclaimer:The above summary was generated by Tridge's proprietary AI model for informational purposes.

Original content

Palm oil has been trading at a premium to other vegetable oils on global commodity exchanges, signalling a shift in supply and demand dynamics which belie Malaysia’s serious ongoing commitment to the environment and long-term sustainability. This trend not only reflects tightening supplies but also emphasises palm oil’s critical role as the world’s most versatile edible oil, used for both food and non-food purposes. While global demand remains strong, reduced planting by major producers, among other factors, is pushing prices higher, reaching as high as RM4,400 per tonne in October. Additionally, Indonesia’s decision to increase its biodiesel mandate from B35 to B40 is expected to boost palm oil consumption by two- to 2.5 million tonnes next year, further limiting export availability. This reduced supply is likely to continue supporting higher palm oil prices. However, focusing solely on supply and demand trends overlooks the significant progress the Malaysian palm oil industry ...

Source: UkrAgroConsult